Wed 08 September 2021:
According to the head of Britain’s financial watchdog, cryptocurrency marketing, particularly those from social media stars, should be regulated, citing a recent ad released by Kim Kardashian as an example.
Amateur investors have been drawn to virtual currencies and tokens by the promise of huge profits, but they also run the risk of losing a lot of money or being defrauded.
“As we live more and more of our lives online, we can’t allow online business to operate in ways we wouldn’t tolerate with any other business,” Charles Randell, head of Britain’s Financial Conduct Authority (FCA), said on Monday.
“That includes rules which protect people from investment fraud and scams.”
Kardashian promoted Ethereum Max, a virtual currency, in a story feed on her Instagram account, which has more than 200 million followers, in June.
Ethereum Max, according to Randell, is unrelated to Ethereum, the world’s second most popular cryptocurrency after bitcoin.
“When she was recently paid to ask her 250 million Instagram followers to speculate on crypto tokens by ‘joining the Ethereum Max Community’, it may have been the financial promotion with the single biggest audience reach in history,” Randell said.
He noted that the post was flagged as an advertisement in line with Instagram’s rules.
“But she didn’t have to disclose that Ethereum Max — not to be confused with Ethereum — was a speculative digital token created a month before by unknown developers.”
Randell stressed that he did not know whether Ethereum Max was a scam.
However, he added that: “Social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation.”
The FCA has repeatedly warned against the risk of cryptocurrencies, claiming that because the assets are not backed by the UK government’s financial services compensation scheme, investors could lose all of their money.
The U.K. Treasury and the Bank Of England are currently looking into the creation of an official digital token, underpinned by the value of real currency, known as a “stablecoin.”
El Salvador on Tuesday became the first country in the world to make bitcoin a legal currency, with President Nayib Bukele revealing that the country had bought nearly $21 million worth of the cryptocurrency in the lead-up to the new law taking effect.
(Input with agency)
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